One Perfect Storm and One Plastic Storm Shrink Holiday Sales
"Mother Nature was very unkind to retailers on Saturday as the year-over-year sales decline was the largest we've seen since we began reporting this number in 2002," said Bill Martin, co-founder of ShopperTrak, in a statement released with the report. "We originally predicted Super Saturday would be the number two sales day of the season just behind Black Friday, with the full weekend landing just ahead of Black Friday weekend as the top performing period. But after analyzing our data following the storm, it's fairly apparent neither will be the case."
But all is not lost. "Our data shows when there is a significant weather event, shoppers spend both before and after in higher numbers and we estimate that both Friday (12/18) and Sunday (12/20) posted retail sales gains in all regions of the country," Martin added. "Additionally because there are four full shopping days leading up to Christmas this year, we anticipate the Northwest and South regions will post higher spending levels this week due to pent up demand – boosting sales figures for the season. We'll know next week if our original prediction of a 1.6 percent sales increase with a 4.2 percent total U.S. foot traffic decline is still intact."
Consumers didn't stop spending altogether this weekend. ComScore reports that online sales jumped 6% last week to a new record, thanks to the fact that consumers were snowed in. The Internet research firm said that for the first 50 days of November and December, online sales totaled $25.5 billion, up 4%. Figures on Saturday and Sunday jumped 13%, helping to push the period starting Dec. 14 to a one-week sales record of $4.8 billion.
Credit Card Companies Get Grinchy
Now, getting back to the unnatural storm created by Scrooges in the credit card industry. In an effort to gain revenue and reduce risk before the recently enacted consumer-protecting CARD Act takes effect in February, credit card companies lowered credit limits and raised interest rates on millions of customers. Credit card users responded by closing their wallets. About 55% of them reduced the amount they spent on credit cards, and retailers are paying the price.
Britt Beemer of the American Research Council told Bloomberg that a reduction in available credit hurts retail sales disproportionately. Credit cards normally are used for purchases over $50, so with less credit available, fewer large purchases will be made. This will impact sales of some of retailers' most profitable items -- clothing, jewelry and home goods.
Clearly, consumers will be spending less this season. And while the weather may have been a factor in when they shopped, it's likely that scarce consumer credit will be the primary factor in reducing how much they spend.